Airline hails 'new era' as it exits bankruptcy process

SAS said on Wednesday it has exited U.S. Chapter 11 bankruptcy proceedings, with the Scandinavian airline’s CEO hailing a “new era” with a stronger balance sheet and new owners.

Sweden-based SAS restructured debt of more than $2 billion, adjusted its fleet and delisted its stock in a process that wiped out the stakes of its more than 250,000 former owners.

“This is truly a new era for SAS with a much stronger position, lower debt and lower cost,” SAS CEO Anko van der Werff told Reuters, adding that the airline had seen a strong operational performance during the recent summer season.

SAS said ongoing cost cuts helped it post its highest-ever monthly profitability in July and it sees opportunities in a growing market, without providing further details on earnings.

“Now, we must look ahead and complete the transformation that we have started,” van der Werff said.

SAS sought bankruptcy protection in July 2022 after years of struggling with high costs and low demand, leading to a court-approved plan making Air France-KLM, hedge fund Castlelake, investment manager Lind Invest and the Danish government its new owners.

SAS had initially forecast the process would take between nine and 12 months, but this was revised several times.

Air France-KLM will initially hold a 19.9% stake in SAS, boosting the French-Dutch group’s footprint in Sweden, Denmark and Norway.

Air France-KLM could raise its stake and become a controlling shareholder after a minimum of two years, subject to regulatory conditions and financial performance.

SAS will switch its customer loyalty programme next month to SkyTeam, of which Air France-KLM is a leading member, from Star Alliance, which includes Lufthansa and United Airlines.

“SAS, Air France and KLM customers will now have a larger number of destinations via codeshares,” Air France-KLM CEO Benjamin Smith said in a statement.

SAS said it exits the court proceedings with a total investment of $1.2 billion, comprising $475 million in new unlisted equity and $725 million in secured convertible debt.

Regional rival Norwegian Air underwent a similar restructuring from 2020 to 2021, emerging with a slimmed-down fleet and lower debt.

On Tuesday, SAS reached a wage deal with its cabin crew in Norway, ending a labour strike over pay and working conditions, which it said would aid operations.